Former Contracting Official Sentenced To 30 Months For Bribery In Relation To U.S. Government Contracts In Iraq

The U.S. Justice Department released the below information:

A former U.S. Department of Defense contracting official was sentenced today to 30 months in prison for his role in a bribery scheme involving U.S. government contracts in Iraq.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Director Frank Robey of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit, Special Agent in Charge Robert E. Craig Jr. of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Special Agent in Charge Darrell Gilliard of the Naval Criminal Investigative Service (NCIS) Washington, D.C., Field Office and the Special Inspector General for Afghanistan Reconstruction (SIGAR) John F. Sopko made the announcement.

James Edward Addas, 55, of Stafford, Virginia, previously pleaded guilty to charges of bribery and tax evasion.  Senior U.S. District Judge Claude M. Hilton of the Eastern District of Virginia handed down Addas’ sentence today.     

According to admissions made in the plea agreement, in August 2004, Addas was a contracting official at the Iraq/Afghanistan Joint Contracting Command in the U.S. Embassy in Baghdad when the owner and CEO of a contracting company based in Jordan offered to pay him a total of $1 million in return for assistance in obtaining U.S. government contracts for major electrical construction projects and related services in Iraq.  The contractor made an initial cash payment of $50,000 in a paper sack, which was handed to Addas inside the “Green Zone” of the U.S. Embassy compound.  With Addas’ assistance, the contractor’s companies subsequently received at least 15 contracts, with a total value of more than $28 million awarded to the companies.  In addition to the initial payment, the contractor later sent funds to Addas via wire transfers that totaled more than $455,000 and paid for other items valued at more than $70,000.  Addas did not declare any of this income on his filed federal tax returns.   

Special Agents of CID, DCIS, NCIS, SIGAR and the Internal Revenue Service investigated the case.  Trial Attorney Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Uzo Asonye of the Eastern District of Virginia prosecuted the case.   

FBI: Financial Fraud - Inside the Investigation of a Las Vegas Construction Boss

The FBI released the below report:

When a federal judge sentenced former Las Vegas construction boss Leon Benzer to nearly 16 years in prison in August, it marked a final chapter in a $58 million fraud scheme that took investigators nearly a decade to unravel.

Over a period of many years, Benzer brazenly sought to gain control of numerous condominium homeowners associations (HOAs) in the Las Vegas area to secure lucrative construction and other contracts for himself and additional conspirators. To date, 44 individuals, including numerous state officials, have been convicted of crimes in connection with the fraud—which has been described as one of the largest public corruption cases in Nevada history.

“This case represented an incredibly complicated financial fraud with a significant public corruption component,” said Special Agent Michael Elliott, who spent nearly eight years working on the investigation from the FBI’s Las Vegas Division. “It involved so many people over so long a period of time, it was like an intricate spider web of crime that kept expanding.”

The scheme was nothing if not grandiose. In attempting to control dozens of Nevada HOAs between approximately 2002 and 2009, Benzer, an attorney, and other conspirators recruited straw buyers to purchase condominiums and then secure positions on HOA boards of directors. Benzer rigged HOA board elections and paid board members to take actions favorable to his interests—including hiring his co-conspirator’s law firm to handle construction-related litigation and awarding profitable construction contracts to Benzer’s company, Silver Lining Construction.

Evidence in the case against Leon Benzer included a $20,000 cash bribe that was concealed in this
baby wipes container.

Benzer manipulated and bribed HOA boards in a variety of ways—he often claimed he had local judges and law enforcement in his pocket; in other cases, he fooled unwitting homeowners into thinking his actions were legitimate and they were simply making wise investment choices.

In September 2008, investigators executed a search warrant—one of nine that would take place during the investigation—and found that Benzer was in the process of targeting well over 20 different HOAs for illegal takeovers. “There were boxes and boxes of folders with information about different HOAs,” Elliott said. “He was deliberately attempting to identify board members along with other information to target what he believed were HOAs vulnerable to takeover through bribery, extortion, or whatever illegal means could be used.”

One of the HOAs had more than 700 units, with each owner paying community fees, Elliott said. “In some cases, HOA boards had operating budgets larger than some small Nevada cities. There was lots of money at stake,” he added.

The FBI, along with investigators from the Las Vegas Metropolitan Police Department and Internal Revenue Service - Criminal Investigations, used a variety of investigative techniques—including confidential sources, multiple undercover operatives, and forensic accountants—and conducted hundreds of interviews to piece together the extent of the crimes committed by Benzer and his co-conspirators.

In January 2015, Benzer pled guilty to multiple counts of conspiracy to commit mail and wire fraud and tax evasion. In addition to his 188-month jail term, he was ordered to pay more than $13 million in restitution.

“This was a very sophisticated scam that evolved over time and generated millions of dollars for Benzer,” Elliott said, adding that when Benzer was riding high, the charismatic fraudster employed “an army of lawyers, had bodyguards, and had an entourage that included three armored SUVs. He had no problem spending money to maintain his lavish lifestyle.”

But like many high-flying scam artists, it was only a matter of time before Benzer was brought to justice. “Now he is in jail and penniless,” Elliott said. “He has nothing.”

After Nearly 20 Years, International Fugitive In Multi-Million Dollar Fraud Scheme Apprehended In Greece And Extradited To United States To Serve Prison Sentence

The U.S. Justice Department released the below information:

A former New York businessman, who disappeared the same day a federal jury sitting in the U.S. District Court in Newark, New Jersey, began deliberating in his tax evasion and fraud trial, was caught while in Greece more than 18 years after his conviction, and appeared in federal court in the District of New Jersey on Friday, July 17, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

Gideon Misulovin, 58, whose last known address was in New York City, was extradited from Greece to the United States to serve his 10-year prison sentence.  He has been incarcerated in the United States since his return on July 16.           

On March 7, 1996, a jury convicted Misulovin of conspiracy to impede and impair the Internal Revenue Service (IRS) in the ascertainment and collection of more than $6.5 million in federal motor fuel excise taxes, wire fraud and money laundering stemming from a scheme to conceal the unpaid diesel fuel excise taxes from state and federal tax authorities.

During trial, Misulovin was free on $500,000 bail and attended each day of the trial.  He failed to appear in court March 4, 1996, for the parties’ closing arguments.  U.S. Senior District Judge Dickinson R. Debevoise of the District of New Jersey in Newark issued a warrant for his arrest.  On June 25, 1997, Judge Debevoise sentenced Misulovin in absentia to serve 10 years in prison and a three-year term of supervised release, and to pay a $150,000 fine.  The court also ordered Misulovin to pay restitution in the amount of $200,000 to the United States and $100,000 to the state of New Jersey.

The evidence at trial established that from 1988 through Jan. 31, 1993, Misulovin and his co-conspirators sold untaxed diesel fuel in a series of paper transactions using wholesale companies.  Some of the companies were shams and called “burn” or “butterfly” companies.  As part of the scheme, the sham company would assume the federal and state tax liability and then vanish, allowing the conspirators to keep the excise taxes they collected from truck stops and service stations.

The case, part of a then-nationwide motor fuel excise tax enforcement effort, was investigated jointly by the Motor Fuel Task Force and the U.S. Attorney’s Office of the District of New Jersey.  In an effort to infiltrate the bootleg gasoline industry, task force agents set up an undercover business called RLJ Management that competed directly with the defendants’ operation.

At the conclusion of the undercover operation, in November 1992, federal agents seized Misulovin’s assets, including approximately $70,000 in cash from his residence and $277,000 from his business bank account. 

Misulovin’s co-defendant and co-conspirator, Arnold Zeidenfeld, of Brooklyn, New York, pleaded guilty prior to trial and testified for the government.  Gurmit Singh and Manbir Singh, of Matawan, New Jersey, who operated truck stops in southern New Jersey, also pleaded guilty for their roles in the scheme.

In August 2014, based on an Interpol Red Notice, Misulovin was detained in a Greek airport using an alias and traveling with an Israeli passport.  He was subsequently arrested pursuant to a U.S. request for a provisional arrest, and after contested extradition proceedings, was found extraditable in 2015.  

The task force included attorneys from the Tax Division and agents from the IRS Criminal Investigation and Examination Divisions, the FBI, the U.S. Department of Transportation and the New Jersey State Department of Taxation and Finance.  Seth D. Uram, formerly a Trial Attorney in the Tax Division and now an Assistant U.S. Attorney in Portland, Oregon, and Trial Attorney Charles A. O’Reilly of the Tax Division prosecuted the case.

Acting Assistant Attorney General Ciraolo thanked the Department of Justice’s Office of International Affairs, the FBI’s New Jersey Field Office and the Greek Ministry of Justice for their assistance in apprehending and extraditing Misulovin.  Ciraolo also thanked the U.S. Attorney’s Office of the District of New Jersey for their substantial assistance. 

Philadelphia Man Pleads Guilty in Multi-Million-Dollar Mortgage Fraud Scheme

The U.S. Attorney's Office, Eastern District of Pennsyvania, released the below information:

PHILADELPHIA—Eric Sijohn Brown, 46, of Philadelphia, pleaded guilty today to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services. Brown pleaded guilty to conspiracy, two counts of FHA loan fraud, 12 counts of loan fraud, and three counts of tax evasion. Between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds.

A sentencing hearing is scheduled for July 8, 2014. Brown faces a maximum possible sentence of 486 years in prison, including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.

KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area.

The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.

Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.

After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.

In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.